Monthly Archives: December 2017

When a member of the rising generation in a family business proposes changing some aspects of how the business is run, members of the incumbent generation may, incorrectly or not, perceive their initiative as telling them that they, personally, are outdated. That they are no longer needed and should surrender their leadership role. The incumbents’ reactions to this perceived threat can have a caustic effect on the business with reverberations felt by all stakeholders.

This situation is particularly challenging if the family has not developed a culture of conversation about the interface of the family and the business, whether about introducing innovation and change initiatives, or about the transition of leadership between generations. Conversations like these may be difficult, but if avoided the outcomes born of silence can be even more challenging.

If you and your family have established protocols for conducting conversations like these, you have taken an important step towards ensuring your long-term success.

Lacking an established protocol for conversation, a perceived threat can be diffused if a proposal for change is offered with care and tact, in a way that—by reflecting human nature—facilitates the incumbent leadership receiving it openly. Key elements of this strategy are:

Showing respect for the past while presenting a vision for the future.

Recognizing and acknowledging the vision, labor and accomplishments of the incumbent generation and those that came before them.

Declaring an understanding of the importance of the family legacy and the desire to carry that forward.

Since this tactic supports and validates the efforts of the incumbent generation, it may circumvent the perception of the proposed change being seen as a threat.

However, that the incumbent generation will eventually be supplanted by the rising generation is not a threat, but a fact. So for them a different strategy may be appropriate. It may be valuable for them to recognize that transitioning out of the leadership role does not signify a departure from the business or the family. They may assume new and equally important roles; as spokesperson, senior advisor, nurturing next-generation leaders, and passing on the family values and history.

Change, for better or worse, is of course inevitable. For the family that is prepared to embrace it, new adventures beckon for both the generation that transitions out of their leadership roles and for the new generations that succeed them.

According to Godin, in the first kind of practice, we learn to play the notes as written, coming as close to a specified standard of perfection as we can. Applying this to family business, we learn to conduct business as the generation in charge does it. Practicing this way, Godin adds, we can become very proficient.

Learning to play the notes as written is sound advice. It respects the past while helping to develop an understanding of the family’s values and why we do business the way we do. The business environment though, is in constant flux—today more so than ever. The successful business will keep an eye on the future and have a mindset that embraces innovation.

The second kind of practice Godin describes as being “more valuable but far more rare.” This he says is the practice of failure. “Of trying on one point of view after another until you find one that works. Of creating original work that doesn’t succeed until it does.”

Founders of family businesses sometimes forget that their know-how was gained from their own painstaking efforts that resulted in errors early in their careers; or perhaps are reluctant to return to those times of uncertainty and anguished miss steps. But when founders seek to maintain their own comfort by denying this process of learning by trial and error to members of the next generation, their actions may lead to a painful decline of both the younger generation family members and the business; a decline fed by an inability to adapt.

Some families build their businesses on the practice of failure as a value. For them innovation is seen as a key to growth. But they are rare. In the majority of business families, the natural conservatism of the generation in charge is at odds with the natural forward-thinking innovative attitude of youth.

These two sides for different reasons are often blind to each other. And being blind, a clear vision for the future of the business is compromised. At this point it becomes wise to seek the help of an impartial outside observer. An expert family-business consultant can help take the blinders off, reawaken the incumbent generations’ memories of struggle and failure, remind them about how they succeeded, and set the new generation free to do the same.